Annual Report 2008 - Ministry of Finance and Planning

8. Financial Statements - 2008
Statement of Accounting Policies
291
Reporting Entity
These Financial Statements are of the Government of the
Democratic Socialist Republic of Sri Lanka and encompass
the Reporting Entity of the Central Government comprised of
Government Ministries & Departments. Public Corporations,
State Owned Enterprises, Statutory Boards and Provincial
Councils are not covered in these statements. However cash
outflows to those entities taken place during the reporting
year and the total interest the Government is having in
the Commercial Public Corporations and State Owned
Enterprises in the form of capital contribution and loans
granted are recognized in these Financial Statements.
Basis of Preparation
These Financial Statements are prepared under historic
cost convention in conformity with Generally Accepted
Accounting Principles. Required guidance has been obtained
from Sri Lanka Accounting Standards and International
Public Sector Accounting Standards. The measurement
base applied is historical cost. The Cash based accounting
has been used unless otherwise stated.
Reporting Period
The reporting period of these Financial Statements is the
year ended 31st December 2007.
Investment Income is recognized in the period it is earned
and collected.
Premiums and Discounts
Premiums and discounts on the issue of a debt instrument
are treated as (an adjustment to the) cost of borrowings.
Gains
Related gains arising from sale of assets are recognized in
the period in which transaction occurs.
Unrealized foreign exchange gains on monetary assets and
liabilities are recognized in the Statements of Financial
Position as at the end of the Reporting Period.
Expenses
All expenses are recognized in the period in which it is
incurred.
Foreign Currency Transactions
Transactions in Foreign currencies are translated into
Sri Lanka Rupee using the exchange rate on the date of
transaction. Exchange differences arising on settlement
of these transactions are recognized in the Statement of
Financial Performance.
Basis of Combination
Ministries & Departments are combined using the
classification codes for revenue collected and expenditures
incurred. Accordingly total financial assets, liabilities,
revenues and expenses are added together line by line.
Revenue
Central Government provides many services and benefits
that do not generate revenue. Therefore revenue is raised by
way of taxes, fees & charges imposed under various statutes
approved by the Parliament.
Revenue is earned by the Government in exchange for the
provision of its products and services to the society.
Assets
Equity investments in State Owned Enterprises are recorded
at cost and shown separately, but investments in Statutory
Boards are not separately disclosed in the accounts as they
operate like other Government Departments relying for their
recurrent and capital expenditure from the government.
Liabilities
In the Statement of Financial Position, all local borrowings
are recorded at cost. Where foreign borrowings are subject to
variation of exchange rates such foreign monetary liabilities
are translated at the exchange rate as at the end of the
Reporting Period.
All such revenue collected through the relevant Ministries &
Departments is recognized at the time of collection.
Ministry of Finance and Planning Sri Lanka
Annual Report 2008